News Corp and JCDecaux released a joint statement indicating that they had ended their discussions, which began over a month ago.
The statement said: "Both companies recognise that economic and capital market conditions have made it increasingly difficult to conclude strategic partnerships on this scale."
JCDecaux, the outdoor advertising company, revealed on September 11 that it had entered into exclusive discussions with Rupert Murdoch's News Corp to buy News Outdoor Group.
The potential transaction involved the combination of certain assets of JCDecaux and News Outdoor Group for cash and shares.
Only last week Jean-Charles Decaux, joint chief executive of JCDecaux and chairman of the executive board, said the economic crisis would not affect the company's bid to buy News Outdoor.
Decaux was reported as saying that though the current crisis was severe, it did not challenge the analysis his company was conducting with News Outdoor and the News Corp team in Russia.
JCDecaux is the second largest outdoor advertising agency in the world. The company generated more than €2.1bn (£1.64bn) in revenue during 2007.
News Outdoor Group has concentrated in developing markets such as Russia, Eastern Europe and south-east Asia.
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